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The zones of discrimination for M-Score is as such:
An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.
Vonage Holdings Corporation has a M-score of -2.99 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Vonage Holdings Corporation was 1.38. The lowest was -5.31. And the median was -2.99.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.
The M-Score Variables:
The M-score of Vonage Holdings Corporation for today is based on a combination of the following eight different indices:
|M||=||-4.84||+||0.92 * DSRI||+||0.528 * GMI||+||0.404 * AQI||+||0.892 * SGI||+||0.115 * DEPI|
|=||-4.84||+||0.92 * 0.9857||+||0.528 * 0.977||+||0.404 * 1.1338||+||0.892 * 0.9764||+||0.115 * 0.8694|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1017||+||4.679 * -0.0931||-||0.327 * 1.1523|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $19.6 Mil.|
Revenue was 211.22 + 203.984 + 204.776 + 209.087 = $829.1 Mil.
Gross Profit was 149.142 + 141.567 + 142.032 + 145.028 = $577.8 Mil.
Total Current Assets was $155.1 Mil.
Total Assets was $642.7 Mil.
Property, Plant and Equipment(Net PPE) was $52.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $36.1 Mil.
Selling, General & Admin. Expense(SGA) was $489.4 Mil.
Total Current Liabilities was $194.1 Mil.
Long-Term Debt was $108.5 Mil.
Net Income was 3.588 + 4.207 + 7.447 + 13.047 = $28.3 Mil.
Non Operating Income was -0.033 + -0.015 + -0.017 + -0.039 = $-0.1 Mil.
Cash Flow from Operations was 36.089 + 23.55 + 18.852 + 9.752 = $88.2 Mil.
|Accounts Receivable was $20.4 Mil.
Revenue was 213.711 + 207.584 + 211.916 + 215.903 = $849.1 Mil.
Gross Profit was 147.329 + 141.895 + 144.446 + 144.434 = $578.1 Mil.
Total Current Assets was $159.8 Mil.
Total Assets was $547.4 Mil.
Property, Plant and Equipment(Net PPE) was $60.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $33.3 Mil.
Selling, General & Admin. Expense(SGA) was $454.9 Mil.
Total Current Liabilities was $196.4 Mil.
Long-Term Debt was $27.3 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(19.649 / 829.067)||/||(20.416 / 849.114)|
2. GMI = Gross Margin Index
Measured as the ratio of gross margin in year t-1 to gross margin in year t.
Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(141.567 / 849.114)||/||(149.142 / 829.067)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (155.14 + 52.243) / 642.749)||/||(1 - (159.848 + 60.533) / 547.389)|
4. SGI = Sales Growth Index
Ratio of sales in year t to sales in year t-1.
Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.
DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.
|DEPI||=||(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))||/||(Depreciation_t / (Depreciaton_t + PPE_t))|
|=||(33.324 / (33.324 + 60.533))||/||(36.066 / (36.066 + 52.243))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses in year t relative to year t-1.
SGA expenses index > 1 means that the company is becoming less efficient in generate sales.
|SGAI||=||(SGA_t / Sales_t)||/||(SGA_t-1 /Sales_t-1)|
|=||(489.354 / 829.067)||/||(454.908 / 849.114)|
7. LVGI = Leverage Index
The ratio of total debt to total assets in year t relative to yeat t-1.
An LVGI > 1 indicates an increase$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((108.534 + 194.115) / 642.749)||/||((27.257 + 196.422) / 547.389)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(28.289 - -0.104||-||88.243)||/||642.749|
An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.
Vonage Holdings Corporation has a M-score of -2.99 suggests that the company will not be a manipulator.
Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations
Vonage Holdings Corporation Annual Data
Vonage Holdings Corporation Quarterly Data